Authority Members of Labuan FSA,
Distinguished members of FIDE Forum,
Honoured guests.

A very good morning to everyone.

1. Today is a momentous occasion as we come together for the FIDE Forum’s “Strategic Board Dialogue on Governance, Trust and Resilience Across Borders,” hosted by Labuan FSA. This occasion is particularly meaningful as it marks the first joint programme between Labuan FSA and the FIDE Forum following our admission as a FIDE member earlier this year. We are pleased to begin this partnership with a dialogue that goes to the heart of what makes institutions, markets and financial centres credible and resilient in an increasingly interconnected world.

Ladies and Gentlemen,

2. Across the global financial landscape, and closer to home in Malaysia, in recent years, we have witnessed a number of corporate failures and governance lapses that have brought the issue of trust firmly into focus. These episodes remind us that financial strength, market reputation and institutional standing can be undermined when governance fails. The consequences extend well beyond the organisations directly involved, affecting confidence in boards, institutions, markets and, ultimately, the systems that underpin the financial sector. This brings us to a fundamental point: trust is not built through policies or statements alone. It is built through the quality of decisions, the accountability of those entrusted to lead, and how institutions respond when tested.

3. This is particularly significant for international financial centres, where confidence is built not only within the jurisdiction, but across borders. An international financial centre is ultimately judged by the confidence that investors, businesses and international partners place in its institutions, standards and sustainability.

4. The global operating environment is becoming increasingly complex, with risks becoming more multi-dimensional, regulatory standards evolving, and local landscape shaped by distinct economic, institutional and market dynamics. At the same time, expectations for accountability and responsible decision-making continue to rise.

5. For Labuan IBFC, this is particularly important, as its standing and competitiveness are ultimately anchored in trust and resilience. Strong governance strengthens institutions, reinforces confidence across the financial ecosystem and, collectively, underpins the credibility of Labuan as a trusted international financial centre.

6. With this in mind, let us take a step back and consider the broader environment in which we operate. International Financial Centres (IFCs) have long played a pivotal role in facilitating global capital flows, supporting international trade and investment, and enabling increasingly sophisticated cross-border financial activities. Over the past several decades, IFCs have evolved in response to shifting economic realities, digitalisation, artificial intelligence (AI), financial crime risks and rising regulatory expectations.

7. This evolution has also been shaped by the lessons of the Global Financial Crisis, international tax reforms, stronger AML/CFT requirements and heightened expectations of corporate governance. Together, these developments have shifted the value proposition of IFCs beyond efficiency alone, towards trust, transparency and resilience.

Beyond Efficiency: Building Trusted and Resilient Financial Centres

8. These evolving expectations, however, must be considered against the different operating contexts of IFCs. Not all centres compete from the same starting point.

9. Larger centres such as London and Singapore operate with very deep domestic markets, extensive institutional ecosystems and large pools of specialised talent. To put that into perspective, the UK's financial and related professional services sector employed nearly 2.5 million people in 2024, while Singapore is home to more than 2,500 licensed financial institutions and close to 200,000 financial sector professionals.

10. Smaller IFCs such as Labuan IBFC, operates on a different model — and that difference is important. We are not seeking to replicate London or Singapore, nor should we. Our strength lies in being a focused, internationally connected platform for cross-border business, group structures and niche financial intermediation.

11. What matters, therefore, is not simply size, but how effectively an IFC fulfils its role within the international financial system. Despite its relatively compact institutional footprint, Labuan IBFC has developed significant global reach, with more than 800 licensed entities, 4,971 operating companies, USD94 billion in total industry assets and USD22.5 billion in capitalisation recorded in 2025.

12. These achievements demonstrate that institutional scale need not be a constraint to international relevance. Labuan IBFC’s strength lies in being compact in institutional footprint, yet substantial in cross-border reach. This distinct profile calls for a governance model that is focused, proportionate and effective – with clear oversight, strong accountability and, above all, outcomes that sustain trust and confidence in the centre.

Governance Reality of Labuan Financial Institutions

13. For a smaller IBFC like Labuan, strong governance is not optional. It is fundamental to maintaining trust and credibility. We must give investors, businesses and our international partners confidence that the Centre operates to high international standards. At the same time, effective governance does not mean a one-size-fits-all approach. It must be credible internationally, while remaining practical and proportionate to the nature, scale and complexity of the market which it operates.

14. So, the question is not whether smaller IBFCs should have strong governance — they clearly should. The more important question is: how do we build governance that is strong enough to earn international trust, yet proportionate enough to support innovation, competitiveness and sustainable growth? I believe that is the conversation we need to have today.

Ladies and Gentlemen,

15. To address this, we must first recognise the distinctive operating context of financial institutions (FIs) in Labuan. Many are part of international financial groups, operating within group-wide governance, closely linked to their parent companies or home-market arrangements. At the same time, many operate with lean team and flatter organisational structures, where individuals may take on multiple responsibilities across business, compliance, and operations functions.

16. In this context, governance cannot be assessed simply by the number of committees, layers of management or size of local headcount. Moreover, a lean structure should not be mistaken for weak governance, just as a large structure does not automatically guarantee strong oversight. The real test is whether accountabilities are clear, risks are identified and managed, decisions are appropriately challenged and concerns can be escalated independently and in a timely manner.

17. This is where the principle of governance with substance, rather than governance for appearance, becomes important for Labuan IBFC. Our policies must be robust enough to meet international expectations, yet practical and proportionate to the realities of cross-border operations. Ultimately, good governance is not defined by how complex an organisational structure appears on paper, but by whether it works when it matters most — when risks emerge, decisions are difficult and accountability is tested.

18. Importantly, this cannot be the sole responsibility of any single person or team. It requires commitment across the institution, supported by clear direction from the top — the Board and senior management - and integration into core business and risk decision-making, rather than being treated as a standalone agenda.

19. At the same time, governance arrangements must recognise that financial institutions operate under different business models, organisational structures and risk profiles. Effective governance is therefore not about applying a one-size-fits-all model, but about achieving the right outcomes in a manner appropriate to each institution. This is where proportionality becomes important.

Labuan FSA’s proportionate supervisory approach

20. At Labuan FSA, this principle is reflected in our proportionate, risk-based and outcome-focused supervisory approach. Our objective is not to replicate models designed for large domestic institutions, but to ensure that every institution, regardless of size or structure, maintains clear Board and senior management accountability, effective control functions, appropriate segregation of responsibilities where practicable, reliable reporting and escalation channels, as well as adequate oversight of cross-border, operational, technology and compliance risks.

21. I would like to emphasise that proportionality does not mean lower standards. It means regulation that is calibrated, risk-based and credible. It implies the right safeguards to address the risks that matter. For Labuan FSA, we have implemented targeted measures that strengthen independence, accountability and effective oversight without creating unnecessary layers of bureaucracy. Some key safeguards include:
i. The Four-Eyes policy to reduce unilateral decision-making;
ii. Dotted-line reporting arrangement to allow key control functions to escalate issues directly to relevant group oversight function; and
iii. Clear expectations on multiple-hatting roles.

22. I will not go into the details of these safeguards now, as I believe they are better explored by our panellists in the discussion that follows. What is important for me to emphasise is that these measures are designed to enable smaller institutions to operate efficiently without compromising governance quality.

23. For smaller IFCs, good governance should not be measured by the number of committees, directors or layers of management in place. What matters is whether the Board and senior management have the right expertise, skills, information and judgement to exercise effective oversight and make sound decisions. This is particularly relevant in Labuan IBFC, where institutions often operate across multiple jurisdictions, rely on parent group policies and navigate cross-border regulatory expectations. The objective is, therefore, not governance by structure, but governance that delivers.

• Practical in form,
• Strong in substance, and
• Effective in outcomes.

Credibility through International Standards and Assessments